TODAY’S STUDY: A HISTORY OF U.S. BIG SUN

The History of American CSP; A Timeline
Belen Gallego, February 2012 (CSP Today)

Introduction

The biggest problem that the CSP industry faces today is the pressure to develop fast.
This is true for everything today – we live in the culture of the immediate gratification.
An email gets to you the same second you send it, and business must grow at a good
rate year on year for it to be viable.

Nature does not do fast, it does sustainable. Nature takes time to grow, plants,
animals or even ourselves as children. Equally technologies need time to develop,
reduce costs and become sustainable; even if sometimes it can be slightly
accelerated.

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However, today patience for business is low. It is all about instant gratification.
Investors are not interested in the long term and banks cannot finance anything
without huge short term benefits or government backed risk covers.

It is no surprise then that in this day and age the markets are all boom and bust,
looking for the latest opportunity to get rich. That is why the fight we have on our
hands is not one of showing that we can compete in price with other technologies,
but one that shows the value of long term investment and sustainable R+D of the CSP
industry; as well as our proven development and cost reduction potential.

My hope was that understanding the history of CSP so far will clarify where we
are going, what we need to focus on for long term sustainability and development
and ultimately, to add to the energy generation industry the full potential of the
concentrated sun.

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A history of American-made CSP

As with most phases of change, the development of renewable energy did not happen overnight. The plants currently being constructed and the entire evolution of the industry worldwide is the result of a chain reaction in regulation and policy, culminating in the emergence of a thriving market today. In fact, the full story of CSP in the U.S. cannot be told without a true understanding of the federal funding provided for it. So that’s what we’ve set out to do.

This timeline aims to clarify the triggers, struggles and successes that have molded CSP into the industry it is today, ready to face the future with renewed vigor, since “those who cannot remember the past are condemned to repeat it” George Santayana

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1974: The oil crisis - a trigger for regulatory development?

If we go right back to the modern origins of the CSP industry as we know it, we need to go back to the 60s and 70s when environmental regulations were appearing in the US for the very first time. As early as 1965, the Clean Air Act began to research air pollution and establish emission standards for automobiles, and the National Environmental Policy Act (NEPA) set out the Council on Environmental Quality, requiring environmental impact assessment for all federally funded projects.

Leading on from these two developments, 1970 saw the creation of air quality standards to limit emissions from electric utilities, fuels, and industrial plants… but meanwhile, oil producers were being incentivized to scale up capacity and the standards for vehicle fuel efficiency were set by the Corporate Average Fuel Economy (CAFÉ). But all was about to change with the first oil shock of 1973, when the members of the Organization of Arab Petroleum Exporting Countries (OAPEC) declared an oil embargo “in response to the U.S. decision to re-supply the Israeli military” during the Yom Kippur war. In place until 1974, the embargo took the entrenched US reliance on oil and shook it to the core. Confidence was further sapped in the wake of the Iranian Revolution with oil production in Iran almost entirely halted, followed by the Iraq-Iran war further depleting not only oil production in the region, but belief in the sustainability of depending on oil from abroad…

1977: Building the key institutions to power CSP forward

1977 saw the emergence of a dedicated power behind CSP, with the formation of the Department of Energy (DoE). The DoE was put in charge of all federal energy agencies, soon establishing the Federal Energy Regulatory Commission (FERC) to regulate natural gas, oil, hydro-electric, and electric transmission markets.

The origination of the DOE (which combined a number of ongoing energy activities at the National Science Foundation and the Energy Research and Development Administration) into a Department Level activity with a Cabinet Secretary, elevated the importance of energy to the U. S. economy and its security, and centralized energy R&D activities including those for advanced renewable energy resources… like CSP.

Momentum grew as the National Energy Act encompassed the Public Utility Regulatory Policies Act (PURPA), the National Energy Conservation Policy Act (NECPA), Energy Tax Act, Power Plant and Industrial Fuel Use Act, and Natural Gas Policy Act. The purpose of PURPA was to establish policy and provide incentives for the development of renewable energy resources – arguably a milestone for CSP… but a lot of work was still to be done.

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The state of California, a visionary for CSP

Whilst federal government set out the USA’s stall for renewables, the realization of PURPA was left to each individual state, resulting (unsurprisingly!) in a range of responses. The stage was set for a significant tension between state responsibility and authority versus Federal, tension that is as yet unresolved. California took the mantle, leading the way to push for renewable energy resources. Building on the research of the DOE and using PURPA to provide attractive incentives, California enabled the building by Luz of the Solar Electric Generating Stations (SEGS); 354 MW of trough plants that were designed and installed in the Mojave Desert from 1985 through 1992.

But meanwhile, the ‘emergency’ push for energy independence was declining… After 1980, oil prices began a 20-year decline, reaching an eventual 60 percent price drop in the 1990s, and eliminating the need for immediate autonomy from oil producers. The industry braced itself – would CSP survive the plunge in oil prices that rendered it ‘unnecessary’ amidst the loss of incentives or would the real long-term benefits of this visionary technology prevail? Whilst no more CSP plants were built until Nevada Solar 1, R&D continued and positioned CSP for its resurgence…

1982: Solar 1

In direct response to the funding provided by the DOE in the late 70s and early 80s, Solar 1 was designed and built by a consortium of government, national labs, and industry to demonstrate steam power tower technology. A 10MWe power plant with thermal energy storage in the form of hot oil and rock, it operated from 1982 through 1986.

Construction of the Solar 1 plant took place in 1981. This groundbreaking plant demonstrated the technological feasibility of power towers for routine supply of electricity to the grid without staff, and with preparation very different from that of a conventional power plant. Plant production was however lower than expected mainly because of the available DNI.

This milestone also proved that higher efficiencies could be reached at higher temperatures, but with more technical difficulties in the solar receivers.

All of the technical limitations found in the Solar 1 plant led to a different plant concept and important technological improvements to solve these problems for future plants, by replacing steam with molten salt or sodium as the working fluid in the receiver in order to increase the heat transfer coefficients. All these conclusions led to Solar 2, the second milestone in this revolutionary R&D phase…

1982: R&D excellence: Solar 1 and Solar 2

In the late 70s and early 80s, in direct response to the two oil embargos, there was a concerted effort by the DOE to develop advanced technologies for electricity production. This resulted in Solar 1 and later Solar 2, although CSP funding levels were in decline at the time of Solar 2 after significant R&D cuts at the DoE.

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1984: Kicking off the construction of an industry

US-based Luz International Limited, headed up by Arnold Goldman, designed and built the largest commercial CSP plants in existence until 2008 with Andasol I. Founded in the ‘golden era’ of favorable conditions for renewable energies in California at the end of the 70s, Luz built plants for industrial process heat and rapidly turned toward electricity generation with the backing of regulators and utilities. The resulting 9 SEGS plants, located in the Mojave Desert, produced electricity then sold to Southern California Edison (SCE) for a 30 year PPA for each plant, each belonging to an independent investor group.

SEGS, built on the foundation of a negotiated PPA, alongside with the fiscal framework established by PURPA and the laws of the state of California, was the very first landmark for CSP. SEGS 1 went into operation on December 12th, 1984 at a cost of $62 million at the time, with a rated capacity of 13.8MW. It is set apart from the other plants since it had a thermal storage system with 2 oil tanks (3 hours at full load). But disaster struck for the storage facility in 1999 when following a fire in the storage system, the plant was out of service for some time… and then continued working without it when it resumed.

Construction of SEGS 2 began in 1985 and entered operation that same December. Built with a natural gas boiler to optimize plant operation during peak hours, it had a capacity of 30MW at a cost of $95.6 million. Whilst neither SEGS 1 nor 2 achieved the thermal performance expected in the field, they were undeniably valuable experiences that allowed Luz to improve the technology, ready for the next phase.

This next phase saw SEGS 3, 4 and 5 designed without gas superheaters, SEGS 1 to 7 have gas boilers, SEGS 8 and 9 have oil heaters. All SEGS plants are hybrids and operate under the California regulation allowing the use of 25% natural gas, with other innovations resulting in an extra 6% of generated electricity despite having the same rated capacity of 30MW. Next, the solar field outlet oil temperature was increased in SEGS 6 and 7 to 390º.

These plants, that required an investment of just under $120 million each, used past experience to improve on the technology and design, resulting in the energy conversion performance of 37.5% - a vast improvement on the 30.5% of SEGS 3, 4 and 5.

With SEGS 8 came the first 80MW plant which today still remains the largest CSP plant ever built in the US. It was built between April to Dec of 1989, closely followed by SEGS 9 in 1990. Only through grueling lobbying did Luz International achieve the removal of the 30MW limit imposed by the PURPA, allowing the capacity to scale up. And the issues didn’t stop here - due to the fiscal framework of the time, Luz International´s job was made more complicated during this period by time restrictions, which dictated that SEGS 9 had to be fully built in only 7 months despite the scaled-up 80MW capacity and over 500,000 m2 solar field collector area.

These last plants before Luz International went bankrupt in 1991 (with 4 plants in Harper Lake still in advanced planning) reflecting the enormous learning curve of this period. Furthermore, technological developments in troughs such as Eurotrough, SenerTrough and AbiasaTrough among others ‘post Luz International’ used the LS-3 geometric parameters and technology. And SEGS was not only a landmark for the construction of the CSP industry. The race for cost reduction had already begun, with Luz International achieving a reduction from 22 cents/KWh in SEGS 1, to a mere 9 cents in SEGS 8 and 9 by increasing the size of the plant and adding technological improvements including longer lasting receiver tubes and more accurate tracking systems.

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1991

In spite of Luz’s bankruptcy (undeniably the result of simultaneous adverse circumstances rather than poor performance) the resilience of CSP was apparent. Luz proved the longevity of CSP as a reliable energy source when even after bankruptcy, all 9 SEGS plants never ceased operation and always met their production targets, thus providing an impeccable track record for the technology and the lifecycle of the CSP plants. Bankability was a must, and CSP had proved its metal…

1995: Solar 2

Even though DOE budgets were in decline at this stage, the DOE determined that molten salt technology would form the basis for future power towers. To demonstrate the tower concept the DOE again formed a private-public partnership to redesign Solar 1 as a molten salt power tower.

Requests for a demonstration plant by the DoE resulted in the DoE accepting the proposal from 8 utilities, the Electric Power Research Institute (EPRI) and the California Energy Commission in 1992 to build and operate Solar 2.

Solar 2 was built on the same site as Solar 1 and used much of the infrastructure that remained available after the conclusion of the Solar 1 project, including the metal tower, most of the solar field, the power block and the power substation.

The circular solar field, coupled with a receiver with a temperature of 565ºC cost a total of $22.35 million. The receiver for the tower alone was $8.53 million and was built by Rocketdyne (Boeing Group) while Bechtel did the EPV for the whole plant.

While the plant was operated as a power plant for only 18 months from February 1998 through April 1999, it provided invaluable information on the design and operation of a molten-salt power plant with storage. As many of the components were designed, built and evaluated for the first time (including the receiver, thermal storage systems and exchanges), many problems arose during construction and commissioning, ultimately delaying construction for nearly 2 years. This long delay consumed most of the consortium funds and made it necessary to shorten the planned testing period and concentrate on routine plant operation and electricity generation.

The real-time period of operation for Solar 2 was limited to February 1998 through April 1999, with the results compiled in the report published by Sandia in 2001.

The plant operated continuously for several days in a row, showing the dispatchability that this type of solar plant could offer to the grid. However, on November 18th, 2008, one of the main hot salt pipes broke requiring the operation to be shut down for a while, to restart in February 1999.

Solar 2 demonstrated the technical feasibility of central receiver plants with molten salt. The thermal storage system based on 2 molten salt tanks was shown to be reliable with 97% efficiency. In fact, Solar 2 provided the necessary background information that enabled the development of a two-tank molten salt storage at the Anadasol I and other parabolic trough plants, critical data that would soon be used to inlfuence the design of Gemasolar in Spain and Crescent Dunes in the USA.

SolarReserve, the developer of Crescent Dunes, carried on with Rocketdyne´s experience in Solar 2 as it licensed the receiver technology developed at that time.

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1998: The dark period for CSP R&D

From the early 80s to 2003, nearly a 20-year period, the CSP Program at the DOE experienced a steady decline in funding resulting in a strategic refocusing of efforts.

Initially, trough activities were dropped from the program but re-inserted in the early 2000s. Molten-salt power towers dominated the program during the mid to late 1990s as most of the resources were devoted to the Solar 2 experiment. Dish engine systems received renewed interest in the early 2000s due to major investment by private companies in this technology. Budget declined steadily down to $5 million per year 1980 to 1989 saw a move towards securing the business models for the fossil fuel industry by externalizing risks.

For example, a Superfund to fund clean-up of dangerous hazardous wastes, including long-term remediation of priority sites listed by the EPA, was created. Furthermore, price and allocation controls were removed from crude oil and refined petroleum products. Federal government assumed responsibility for permanent disposal of radioactive waste whilst Low-Level Radioactive Waste disposal was made the responsibility of the states.

The gradual reduction in fiscal exemptions responded to the drop in the price of oil and natural gas that took place from the beginning of the 80s.

But it wasn’t all bad news. Regulation was passed which aimed to reduce air pollution from vehicles and made oil companies responsible to clean up marine spills… and meanwhile there was a move to reduce the dependency of foreign oil imports in 1992. But Global Warming was brought into the public eye from 1997 when the USA refused to sign the Kyoto Protocol. From 2003 to 2006 the administration sought to eliminate the CSP program from DOE. The meager budget was used to help the laboratories retain critical capabilities and to maintain facilities. This effort was modestly successful, although the labs did lose some critical researchers.

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2003: The Sargent & Lundy Report

In the late 90s and early 2000s, there was a review of the DOE’s Renewable Energy Programs by the National Research Council.

It recommended that the US limit or halt its R&D on power-tower and power-trough technologies because they believed that more development will not further their deployment.

In 2002, DOE’s Office of Energy Efficiency and Renewable Energy (EERE) decided to conduct a review to identify whether there was a need for further technical analysis in CSP.

The CSP industry at the time, prepared a refined rebuttal, which included the Sargent & Lundy Report that was perhaps the most important report in the history of CSP in the US. Sargent & Lundy was selected by DOE/EERE to conduct this independent due diligence analysis of CSP technology cost and performance. It was published in Oct 2003.

During this time (2000 -2005) a group of CSP experts which included Tex Wilkins, Tom Mancini, Mark Mehos and Fred Morse travelled across the South West raising awareness of CSP with regulators, utilities and governors. It was as a direct consequence of all their lobbying work that the Western Governors Association set a 1GW goal for the South Western states.

2005: The Re-Birth of the CSP industry

In 2005, the DOE established the 1603 Loan Guarantee Program to help renewable energy obtain financing by providing backing for the loans. This was expanded through additional legislation and programs. This program was critical to the continued deployment of CSP in the U.S.

From 2006 to the present day, with the success of CSP developments in Spain, the startup of Nevada Solar 1 in 2007 and new leadership at the DOE, all the signs showed that CSP could be part of the solution for electricity generation. Unfortunately, whilst DOE budgets increased to around $50 million per year, financial pressures and somewhat erratic leadership left the future of the DOE’s CSP research and development up in the air. However with the placement of key legislation it firmly cemented CSP progression on the American socio-economic agenda:

• Energy Independence and Security Act of 2007 (EISA 2007) promoted renewable energy, energy efficiency, metering, and higher fuel economy standards
• Executive Order 13423 (E.O. 13423) directed federal agencies to reduce energy use, increase renewable, and shift vehicle fleets to reduce petroleum consumption
• Emergency Economic Stabilization Act of 2008 provided energy credits for investments in wind, solar, geothermal, fuel cells, and energy efficient products
• American Recovery and Reinvestment Act of 2009 (ARRA) earmarked billions of dollars for energy efficiency, smart grids, energy reliability and delivery, fossil fuel research, and environmental clean-up
• Executive Order 13514 (E.O. 13514) set requirements for energy efficiency and greenhouse gas management for federal agencies…

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2006

In 2006, Solargenix built the Saguaro Solar Plant in Tucson, Arizona with Acciona. This plant, despite being just a demonstration 1MW parabolic trough plant, provided great experience for both companies in the run up to the build of Nevada Solar 1 in Las Vegas, Nevada in 2007.

“In 2005, the commissioning of the Saguaro plant was clearly the jump-start which revived the CSP industry worldwide. Nevada Solar 1, the first large commercial plant build after 17 years, is an historical milestone marking the re-birth and the vitality of the CSP industry.” Gilbert Cohen, President and CEO, Eliasol Energy , LLC

2007

By the time NS1 and PS10 went online, the CSP revolution was brewing. New technology companies that had been forming in recent times worked towards demonstrating the viability of their technologies, including Ausra (now AREVA), SkyFuel, eSolar and Sopogy

Developments in Spain

The development of the CSP industry in USA couldn’t be properly evaluated without understanding the international industry and more particularly the Spanish developments that triggered the construction of the first CSP plant in Spain after more than two decades.

After a very long dark period in which only research was happening in Spain, in 2007, Abengoa’s PS10 went online: an 11MW tower CSP plant near Sevilla. Following PS10, Nevada Solar 1 went online in Nevada and shortly afterwards ACS Cobra started building Andasol 1, a 50MW parabolic trough plant with 7 hours thermal storage (TES).

The shift towards commercializing CSP technologies in Spain was set in 2004 in Spain by the first Royal Decree RD 436/2004 which established a suitable framework for both promoters and banks. It was later on in 2007, when the RD 661/2007 confirmed the favourable scenario for CSP to flourish.

Spain was the first country to introduce a Feed-in-Tariff (FiT) for CSP. The original FiT offered a rate of €0.12/kWh for electricity produced by CSP plants with up to 50MW of capacity. The FiT was increased to €0.18/kWh in Royal Decree 436 in 2004 and then to €0.27/kWh in 2007. The Royal Decree 661 in 2007 fixed a tariff of €0.269375/kWh for the first 25 years, which dropped to €0.215498/kWh. Under RD 661/2007, CSP producers could claim the FiT in two different ways.

In December 2010, CSP industry players in Spain saw a much welcomed clarification of the FiTs which had caused such confusion in the previous 18 months. According to the latest Royal Decree 1614/2010, the CSP plants registered according to the Royal Decree Law 6/2009 will have the same tariff or premiums than those already established in the old Royal Decree, 661/2007. This support scheme will be applicable to the 60 plants that fulfilled all the requirements of the Royal Decree 6/2009 in May 2009. The total capacity of these plants is about 2,400MW.

The regulatory framework in Spain also became the perfect development ground for leading engineering and EPC companies to gain experience and international leadership in the CSP industries. Companies such as Acciona, Abengoa, ACS Cobra & SENER etc are world leaders and operate in most of the CSP markets through the world.

2008

• The first prototype plant to be built was Ausra´s plant Kimberlina, a 5MW Fresnel plant in Bakersfield, California, in 2008
• Sopogy built their prototype in Honaliku in Hawaii in 2009, which is a 2MW microCSP plant
• Sierra Sun Tower, a 5MW CSP multi-tower plant was built by eSolar in 2009
• Tessera Solar built a 1.5MW dish stirling CSP power plant in Peoria, Arizona in 2010 called Maricopa Solar Power…

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2009

For the future of CSP in the USA, 2010 was a significant year. The 75MW Martin Next Generation Solar Energy Center (solar steam integration into a combined cycle power plant) was completed – the second largest CSP plant after Nevada Solar 1. With this addition, cumulative CSP capacity from all 17 operating plants reached 507MW in the US in 2010 – an enormous milestone for the industry as a whole.

2010

However, a number of challenges are facing the industry in the USA and the future presents a mixed picture, developers faced two major barriers: litigation and funding. Tessera Solar shutting down yet another project in the US illustrates the challenges developers confront, particularly with regard to environmental permitting. In mid-December 2010, Tessera’s Imperial Valley project was threatened by lawsuits from environmentalists and native American groups. Despite five years of intensive permitting application work at a cost of more than $20 million, and receiving state and federal approval, a US federal judge granted an injunction to halt further development.

The Imperial Valley project was sold in mid-February to AES Solar, a joint venture between the AES Corporation and Riverstone holdings. In addition, Tessera’s 850MW Calico project in California ran into complications when the project had trouble lining up financing and lost its PPA with Southern California Edison. The project was sold last December to K Road Sun, an energy investment firm.

However, in the last quarter of 2010 two plants of ‘never-seen before’ dimensions obtained conditional loan guarantees and are now under construction: Ivanpah and Solana.

The novelty of these plants was the size and innovation incorporated in their designs, with 6 hours of molten salt storage for Solana (A 280MW parabolic trough plant); and the tower design for Ivanpah (3 towers totalling up to 392MW). Both plants were to that date the largest announced in the world. Ivanpah also constituted a leapfrog advance in tower technology scaling up 6.5 times the size per tower that had been achieved previously by PS20, a 20MW tower plant in Sevilla (Spain).

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2011

2011 was full of good news and followed a similar trend, with a $3.35bn announcement by the DoE in loan guarantees for 4 different projects: Blythe (Solar Trust of America, two 240MW parts of a 1GW plant), Crescent Dunes (SolarReserve, 110MW tower project, The Mojave Solar Project (Abengoa, 280MW) and Genesis Solar Project (NextEra, 250MW trough project)

The biggest shake-up for the industry came in October 2011 when Solar Trust of America, Blythe’s developers, took the radical decision to change the technology of Blythe from CSP to PV in a U turn move to please board members. The company had to give up the loan guarantee which was the largest amount at $2.1 billion, but ultimately the move failed as Solar Millennium filed for bankruptcy at the end of the year.

Future projects are on an enormous scale, and even if only a few of them are completed, the USA will have more CSP MW capacity than the whole of Spain.

Gemasolar

At the end of 2011 Spain had a capacity of 953MW. Most of the CSP plants constructed have been 50MW parabolic trough.

The most notable development about the CSP industry in Spain is that a clear technological development of the industry can be seen. For example the latest development in the industry is the construction of Gemasolar, a 20MW tower plant by Torresol which generates energy 24 hours with 15 hours molten salt storage systems.

By using molten salts, Gemasolar works at higher temperatures than previous generations of tower plant such as the PS10. This is because, at 560°C, the efficiency of a molten-salt tower plant is about 24% higher than that of its steam-powered predecessors.

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Conclusion

The industry’s capacity currently totals a1042MW constructed in Spain and 509MW in the USA, with much more in construction. New markets have been added across the globe especially in India, South Africa Australia, Middle East North Africa and even Latin America.

Whilst the USA CSP industry appeared to peak in 2008, with ‘business as usual’ proving difficult after a global financial crisis, interest remains high from technology companies. Many innovative concepts have sprung up over the past few months R&D of new components and concepts continue to take place.

This CSP timeline has demonstrated just a portion of the development of the CSP industry. We can see the tremendous potential for development and cost reduction throughout both the greatest successes and the major disappointments. The SEGS plants and tower prototypes Solar 1 and 2 were the original technological trials, the results of which we are seeing today in plants such as Gemasolar and Crescent Dunes.

The huge pipeline of planned capacity that the industry have in development is no mean feat for an industry that has faced so much adversity through their history. Very uniquely, despite its 30 years track record, we have not experienced 30 years of development – breakthroughs have only happened in half that timescale.

Additionally, adverse conditions have made it incredibly hard for the industry to develop, prosper and become even more competitive today. But we have learned our lessons the hard way: CSP is not a volatile industry, and is here to stay, providing electricity for generations to come. We’ve lost some battles, but staying focussed on winning the war to cement CSP’s place in the energy generation market will ensure our success for years to come.